Russian Grain-Export Curb Concern Is Seen Unfounded by Union

Following are comments by Alexander Korbut, vice president of Russia’s Grain Union, on concern that the country’s government might impose curbs on cereal exports after a drought.

Korbut spoke by phone today from Moscow after Economy Minister Andrei Belousov said the government may consider limits. Deputy Prime Minister Arkady Dvorkovich was later cited by news agency Interfax as saying there were no such plans.

“The economy minister’s position simply stemmed from the fact that his ministry is in charge of consumer-price inflation. That is why they comprehend any price increase as a red flag, because grain can take the rest of prices up by a chain. That is why it provoked such an alarm.

“De facto, Belousov announced his ministry’s position. The rest of institutions, including the central bank and the agriculture ministry, don’t have such a position.

“It is more important that Dvorkovich reacted very quickly. Dvorkovich said definitely that the curbs are not regarded in principle, so the news has been outdated substantially in the moment when it appeared.

“The fears, which appeared automatically at once, are not quite grounded. So rumors about Russian grain exports’ death have been greatly exaggerated.

“The exchange rate can become the more substantial export stopper now. A low U.S. dollar rate at very moderate price growth is a normal economic stopper of exports.

“But I think exports will be very high in September, around 3 million metric tons. Later activity is not as obvious. Exports will be active in October, but less than in September.”

On potential ways to stabilize grain prices in Russia:

“If the government wishes to regulate prices, only local regulation is necessary and it can be carried out with the use of state grain stockpiles. But these interventions are not very rational now. If they are carried out, it will happen no earlier than December.

“The state may announce that it will sell stocks and will give price thresholds for these sales, thus showing indirectly to market participants that it’s ready to use this mechanism, pouring some cold water on hot heads.”

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